FACTORS INFLUENCING EMPLOYEE RETENTION.
(A CASE STUDY OF KCA UNIVERSITY)
BY
BERNARD WABWRIRE
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE FINAL YEAR RESEARCH PROJECT OF THE BACHELOR OF COMMERCE DEGREE PROGRAMME KCA UNIVERSITY
AUGUST 2020
Chapter One.
1.0 INTRODUCTION
1.1 Background to the study.
Employees are the principal resource an organization can ever have. With the increase of machinery use and globalization and also bearing in mind that many people would need a decorated career path, many organizations risk having layoffs and employee turnover. Sloan, (2005) defined Employee retention as a systematic effort by employers to create and foster an environment that encourages the current employees that an organization has to remain with the organization for a somehow more extended period. Staff retention has always been a major headache in organizations, so many reasons have come upon why this is happening. The study seeks to find out some of the factors (major and minor) that may help in addressing the issue of employee turnover and outline the importance of employee retention in organizations. An organization should have an employee retention strategy rather than treating it as an outcome, and Jacobson (2008) therefore sees employee retention as relating to the efforts by which employers attempt to retain employees in their workforce.
In the current working environment employees look for more than just a paycheck, if they fail to get the independence and the love that they want they might start viewing elsewhere. It has over time been a nightmare for many employers, who might not know of some of the factors that may help them overcome. When employees leave an organization, it becomes an expensive journey for them since the vacancies are to be filled by other people and even the organization service delivery becomes a challenge (Chaminade (2007).
As much as you can’t satisfy everybody all the time employers should seek to have a working strategy to curb unnecessary dismissals and a high number of turnover and in turn help in increasing productivity and profitability of any given organization. Aligning employees’ needs with the goals of an organization and the issues of communication, teamwork, counselling, allowances, and many employers have neglected the ones in this. Therefore, this study will help in outlining some of these factors that influence employee retention.
1.2 Statement of the Problem.
The purpose of this study is to find out the factors that may influence employee retention. Employee retention can be said to be a primary effect and measure for a healthy organization. It does not only benefit the stakeholders if an organization able to retain their employees for a long time but also builds an excellent public image. According to Flippo (2001), the employment relationship is undergoing a lot of challenges that imply attraction. The management plays a vital role in employee retention. If the management is ineffective, then they will have a hard time in retaining its talented workforce and vice versa if the management is effective.
For an organization to be effective and to achieve long term success, according to Fit-Enz (1997), it should have an ability to effectively manage its human resources that are considered crucial in the organization.
As globalization becomes the order of the day, so does the workforce change to cater for this change? New ways of doing work and technological effects make it hard for organizations to retain their workforce for a more extended period. Employee loyalty and commitment, corporate restructuring are becoming a nightmare when it comes to retention of the talented team. Many firms have been left in states of uncertainty when they experience unplanned employee departure, and this means their productivity and profitability will be immensely affected. According to Caplan, Gayle and Teese 1997, the phenomenon is right in the light of current economic uncertainty and following corporate downsizing when the impact of losing critical employees exponentially increases.
A previous survey was done by United States Federation of Nurses and Health Care Professionals shows that half of the registered nurses that carried out the study had at one time considered leaving employment citing job dissatisfaction brought about by poor working conditions and increased workload (Pearson 2001). Still, on the same line, Pearson, Reilly and Robinson (2004) recorded that in the UK, compensation was ranked the fourth-factor affecting employee retention while poor working conditions and lack of better facilities were the top factors.
Kochanski & Ledford (2001) came up with several factors that contribute to a forthcoming wave of turnover. It should be noted that employee retention is not a one-time event but a never-ending process that starts with the recruitment process. Forgacs (2009) insists that retention and engagement begin at the very early stages of the recruitment process. Organizations are therefore encouraged to create a long lasting impression from the day an employee walks into the gates of the organization. Many studies that relate to employee retention have failed to address the real factors that influence an employee to stay in an organization.
This study will, therefore, examine the essential factors that have helped KCA University retain most of its employees and some of the factors that may help them to keep up with the trend.
1.3 Objectives of the Study.
1.3.1 The General objective.
The general objective of the study is to find out the factors influencing employee retention at KCA University.
1.3.2. Specific objectives.
- The specific objectives are:
- To find out the impact of training and development in employee retention.
- To find out the effect of compensation and rewards in employee retention.
- To establish the role of the working environment in employee retention.
- To determine the significance of Performance appraisal in employee retention.
1.4 Research Questions
- What impact does training and development has in employee retention???
- Do compensation and rewards affect employee retention??
- Which role does working environment play in retaining employees??
- Does performance appraisal have any significance in employee retention??
1.5 Justification of the Study
When it comes to employee retention, KCA university has remained to be the best player in the industry. At the same time, other organizations struggle to get through this hurdle. This study will bring to light some of the best practices that KCA University has employed over the years and how it can shape the view in other organizations around.
1.6 Significance of the Study
The study is vital to help organizations learn the best practices to undertake to minimize employee turnover more so with the fast-moving workplace experience and individual talents wanting to have a decorated career in their lifetimes.
To the management of KCA University, it will help them keep the commendable factors while also giving oversight on what they can change to continue retaining their employees. Think of working plans that may motivate the workforce to increase productivity and profitability, since human resources can’t be replaced even with the existence of technology, and they’ll still need human resources to run them.
To researchers and academicians, the findings of this case study will help them understand the factors behind employee retention, identify the shortcomings of the study and be able to improve on the results.
1.7 Scope of the Study
The study is concerned with evaluating the factors influencing employee retention at KCA University and its targeting 50 employees in several departments at the management level. Namely Customer Service, Human Resource, Finance, corporate and faculties.
CHAPTER TWO: LITERATURE REVIEW.
2.1 INTRODUCTION:
This chapter will give a review of related literature on the subject under this study as presented by researchers, scholars, authors and analysts. The research will extract materials from several sources which are strictly related to the objectives and theme of study that are both theoretical and empirical review.
2.2 Theoretical Review.
Going back from the early 20th century, employee retention has been a topic of extensive research with most employers trying to find out ways to make their employees stay. Retaining employees can be a huge task since everybody has their reason of why an organization where they work currently does or doesn’t fit their match. The reasons range from the urge for a huge payor status, going back to school for higher education, relocating spouse and also getting promoted or getting fired. Employees stay at a particular organization because they are favoured by other factors that give them enough reasons to stay. It being said it’s also a big step for employers to keep their staff for as long as they can. It reduces the cost used in recruitment and selection processes and more still the time and cost used to orient new blood coming into the workforce. Great businesses value dedicated workers and know-how to retain them. An organization spends a tremendous amount of money on hiring people and training them still every year, and many businesses suffer from a massive loss of talent (Rakhra, Harpreet Kaur 2017).
As there is no infinite reason as to why employees stay in an organization, it is always important for the HR department to look at the possible reasons through carrying out exit interviews and also carry out the performance-based management. Where communication becomes a key ingredient, thus being able to scrutinize and get some of the important information from the inmate employees.
Setting up working and efficient strategies for employee retention should be one thing that keeps Human Resource managers on toes. Akala, Harrison S (2012), on their study about factors influencing employee retention among the non-teaching staffs at UON (Kenya) found out that organizations such as UON can use strategies of encouraging transparency and fairness in the provision of training and development opportunities, and also carrying out comprehensive consultations with employees when setting performance targets as motivators for employees if they are to retain them at the workplace. Employers have to try their best to retain their key employees, to improve their profitability as well as cut costs and save time involved in recruitment and selection plus training of the newly hired staff.
According to KUMAR and BALAJI. On a study about Employee Retention Strategies (2017) outlined that certain variables such as training and development, recognition and reward for a good performance, a competitive salary and job security are very crucial in determining whether employees leave or remain in the organizations. Therefore they should not be taken lightly because they still build or spoil the reputation of an organization.
2.2.1: Herzberg’s two-factor theory
They are also called Motivation-Hygiene theory. The main concept behind this theory is the differences between the two factors. Motivation factors are those factors that are attached to the employees themselves and cause them to be satisfied with the jobs they are doing, these factors include but not limited to the possibility of growth, recognize achievement and the work itself (Hezberg 1966, 2003). In contrast, Hygiene factors are tied to the organization, and they include organizational administration and policies, working conditions, salary, interpersonal relations with the supervisors,(Hezberg 1966;2003) etc.
This theory can be put into application by organizations, first by trying to reduce or if possible, eliminate the dissatisfaction (extrinsic factors) that may cause an employee to leave or reduce their work rate. The process can be done by improving the communication channels, improving the policies to favour both the employer and employees, salary increment solutions and improving the interpersonal relations among employees and their immediate supervisors on their line of duty. Secondly, organizations may seek to improve the factors that are closely related to the employees, and these are the motivators or intrinsic factors. Taking into account that employees are the main resources of an organization, their satisfaction may lead to improved productivity and profitability as well as leading to reduced turn over. Organizations are to factor in how to ensure that personnel grows either in their experience or technical or education-wise, look into it that an individual is recognized in their performance and set policies that help the employee feel the love for the work that they do. If someone is not dissatisfied, it doesn’t mean they are in the other bracket of satisfaction. Hence, the policymakers in the organization should see to it that they correct the dissatisfactory factors which Herzberg calls them “Hygiene factors” while improving the Sati factors which according to Herzberg are the “motivators”.
2.2.2: Victor vrooms expectancy theory.
According to vroom, employees have personal goals that they need to achieve when they work in an organization; these goals are therefore fulfilled when they are in line with the organizational goals, of reward and work outcomes. It now means that organizations and individual goals should be related, in terms of how attractive the rewards and consequences are and to the extent to which the organization meets the personal purposes of an individual.
In the first moving world, it will be a challenge to the employer if they fail to meet the expectations of employees, Vroom’s theory can help employers learn on what they ought to do if they are to attract and retain exceptional talents in the organization. Knowing personal goals cannot be truly applicable to all individuals. Still, an organization must seek to meet the expectations of a more significant number of employees. With this, they can easily find a way of lowering turnover and improve the retention of their well-trained talents.
2.2.3 Maslow’s hierarchy of needs theory
Abraham Maslow’s (1943) stated that Every human being, including employees, has a hierarchy of unsatisfied needs within themselves which a higher need cannot be satisfied until the lower one is met. His hierarchy of needs is divided into five important sections of physiological, safety, social, esteem and self- actualization. Humans want, previous literature on this suggests that organizations should find a way of motivating employees through the creation of programs or practices that aim at satisfying unmet or emerging needs of the individual, (Dr Sunil Ramlall 2004). He further articulates that support programs and focus group are essential in helping employees deal with stress, which may occur in any level of the hierarchy and more so during the most challenging times and that means organizations have to take their time in understanding the respective employee (Kreitner, 1998).
It should be noted that organizations might lose their talents to other competitors if they fail to address, the basic needs of employees. To retain them, managers are tasked with the duty to create an environment which employees can use to utilize their full potential. In case there is negligence to provide such an environment, then there might be increased employee frustrations, job dissatisfaction, low productivity and withdrawal from the organization (Steers & Porter, 1983. P32). Some of the potential ways of fulfilling employee satisfaction as outlined by Champagne & McAfee in their book Motivating Strategies for Performance and Productivity: A Guide to Human Resource Development are physiological needs:-vending machines, cafeteria; the security needs divided into Economic (wages &salary, fringe benefits), psychological (avoiding abrupt changes, solving employee problems, giving praises & awards) and physical (working conditions, resting periods); the third need is Affiliation;-encourage social interaction, create team spirit, allow participation; on the esteem need:-Design challenging jobs, delegate responsibilities, give training finally on the self-actualization an organization can:- give training, encourage creativity and provide challenges. They further observed that general managers with strategies are thought to be more considerate, favourable and interested in their employee welfare and also viewed as more favourable managers. (Champagne & McAfee, 1989).
It must be stated that individual need shifts from one person to the other, organization should, therefore, not kill itself just to satisfy a personal need. Still, they should look into the interest of a larger group while trying to correct the needs of the other remaining group slowly.
2.3 Empirical Review.
Recruitment and retention of skilled and qualified employees is a major foundation of any small or large business. That’s according to the survey on job satisfaction by SHRM (2007). Hausknecht, Rodda, & Howard (2009) argues that job satisfaction is a primary reason for employee retention, as more than 51% chose that over other extrinsic factors.
With the changes and modification of workplaces, employees have had a shift of the factors that make them happy and dedicated to their workplaces for a reasonably long period. Employers, therefore, are finding it difficult to maintain a team of motivated employees who have the goals and objectives of the organization at heart. The workforce too is changing, and many women are also shifting from being housewives as earlier thought to taking over managerial and supervisory positions. It means that with a large number of individuals fighting for recognition and a good salary, the organization may be left in a dilemma of seeking to keep the employees who sometimes may have been given training within the organization. The workforce has been hit with individuals having high-stress level because they don’t have guaranteed job security or they are facing other conflicts both interpersonal and intrapersonal which hinders them from being productive and may always be on the move to seek for a better place than he/she feels accommodated with their needs. The HR professionals, therefore, are to be on their toes to determine, create and come up with strategies that don’t focus only on age or gender but which will help the organization turn the employee’s dissatisfaction into job satisfaction.
2.3.1 The impact of training and development in employee retention.
Training and development programmes have been seen to improve employee’s potential and performance, which may also yield productivity and profitability in that order. According to a study carried out by Umer Ahmad (2014) on the impact of training on employee retention, He stated that most researches have proved that there is a significant correlation between exercise and employee retention and also training can influence employees to stay in an organization for a more extended period.
Offering employees, the training programs can be a mega boost in retaining them since this reassures them that the organizations still value them and their personal development is at the core of the organization. Employees see themselves as a much-needed asset in the organization and therefore give more than the usual. If by any chance you randomly ask a long-serving employee in any organization on what has kept them for there or what motivates them at to stay, most of them will say that the training offered by the organization has been crucial. They learn a lot from that, so they won’t risk leaving for other organizations.
2.3.2 The effect of compensation and rewards in employee retention.
Compensation and reward are terms used to mean monetary and non-monetary benefits that an organization may use to appreciate its employees for excellent performance or to warn its employees on the poor performance.
According to a study on the impact of compensation package on employee retention carried out by Michael, Babu, Prince Andrew, franklin, Chacko and Anney (2016). they found out that there is a significant relationship that exists between compensation package and job satisfaction, it further proved that the more employee is satisfied with the box, the longer they remain in an organization. This clearly shows that compensation is an ingredient in enabling an organization to keep its key and talented staffs for the foreseeable future. Offering a right compensation package in an organization compensation strategies will give it an added advantage competitively over its close competitors who may be waiting to snatch its talents.
Further studies on the impact of rewards on job satisfaction and employee retention studied by Sharon Ruvimbo Terera and Hlanganipai Ngirande (2014), observed that rewards may lead to employee retention but may fail to result into job satisfaction.
Decision-makers and the organizational management are therefore called to make and review compensation and rewards packages at various levels to try and earn employee satisfaction and hope that it helps in reducing the turn over among its employees; there is a strong relationship between tested dependant and independent variables like salary, bonuses, incentives and lastly fringe benefits according to Osibanjo, Adewale, Omatayo and Andeniji A.A and Fiola, Hezekiah Heirsmac findings in 2014.
2.3.3 The role of a working environment in employee retention
In simpler terms work environment consists of social and physical conditions which affect an employee while carrying out his/her job. They can be collaborations, feelings of well being, their relationship with their colleagues or supervisors and also clients, and also but not limited to employees health.
Several studies have come up to describe the roles that work environment plays in employee retention. Subash and Kusum Lata in 2017 suggested that Supportive Work Environment has a crucial role in predicting employee retention and that the organizational engagements offer mediation in the relationship of employee retention and work environment. That’s according to their study on the effects of a supportive work environment on employee retention.
Other further researches like the one carried out by Mandanya and Yogita (Aug 2015, vol 9) recommended that the management should provide a productive working environment if they are to retain its employees. While shumaila, Cai and Qasim also added that Human Resource practitioners should develop mechanisms for imparting a supportive working environment to foster a healthy exchange relationship with people which will result in employee retention. The studies above indicate that employee retention is to a large extent tied to employee retention and vice versa
2.3.4 The significance of Performance appraisal in employee retention.
Appraising and critiquing the performance of employees may seem to be a lesser thing. Still, the truth is that it goes a long way in helping employees determine, understand, communicate and also get feedback because they performed poorly and on those that they did well.
Previous studies have, by far indicated that private sectors have always had a more significant appraisal impact in terms of promotion, retention, layoffs and identifying employees training needs than their public sectors counterparts. (Jamal Abu, David Weir 2007).
In a closely related study undertaken by Nyanjom and Christine on the factors influencing employee retention in state corporations in Kenya, determined that performance appraisal was ranked as a second important factor only bettered by training and career development. Following the above-stated studies, it may be safe to say that performance appraisal though taken lightly, is an essential factor in helping an organization takes hold of its key staff for a more extended period. Organizations should, therefore, think of using this as one of the critical Human Resource strategies while implementing its solutions for employee’s retention factors.
2.4 Research Gaps
Despite having extensive research carried out on employee retention, there is still a considerable gap in determining the determinative factors that guarantee employee retention: this is because employees have different personalities and different motivating factors.
Many employers have tried to put in place measures to curb turn over and keep their employees motivated and engaged in their workplaces for a more extended time but again that hasn’t guaranteed that employees will stay in that organization. Employees will always move from one competitor in search of better conditions and a better package that is a bit higher and better than their current employer.
2.5 Conceptual Framework
Independent Variables Dependent Variable.
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 Introduction
This chapter will comprise of the arrangements of methodology that will be used to carry out the study. The research will include research design, the target population, sampling procedures, instrumentation and data collection and analysis technique.
3.2 Research Design
The researcher will adopt a descriptive design. The term descriptive, according to Lyon in 2007, is used to mean the type of research questions, models and data analysis applied to a given topic. The statistics will tell what exists; consequently, it determines the cause and effect.
3.3 Target Population.
According to Hosea (2013), the population can be said to be a finite or infinite collection of items under consideration. In regards to the research understudy, the community will refer to the aggregation from the sample, which will be selected for study.
A target population, therefore, will denote the totality of elements that will have one or more characteristics in common (Williamson, 2011). This study will involve the management, teaching and non-teaching staff of KCA University.
3.4 Samples and Sampling Procedure
According to Polit & Beck (2010), a sample means a representation of a few selected participants from a population. The sample for this study will target 60 employees of KCA University drawn from different departments of management.
The researcher will adopt a stratified random sampling method to select a sample population of staff in the targeted departments, with at least a 10% representation from every department. The choice made on stratified random sampling is because it provides a greater precision as compared to simple random samples.
3.5 Instrumentation
For this research, the researcher will opt for Questionnaires. According to Orodho (2005), it was noted that questionnaires are more efficient since they require less time, less expensive and always permit data collection from a broad population. They are making it a preferred choice for the researcher.
3.6 Data Collection
The study will use primary data collection method. Primary data is said to be data collected by a researcher from first-hand sources. Techniques like questionnaire surveys, interviews and but not limited to experiments are typically used. The data will be obtained from employees in different departments under study.
3.7 Data Analysis Technique
Data analysis is a process of transforming and later modelling the collected data to evaluate useful information and draw conclusions which will support the decision-making process.
Both qualitative and quantitative data analysis technique will be used. The dependant variables will be analyzed using arithmetic mean & standard deviation, and the data collected will be examined from the given data.